N-30D 1 clcvf_cscvf-se.txt (CHARTWELL LOGO) CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND 1235 WESTLAKES DRIVE, SUITE 330 BERWYN, PA 19312 (610) 296-1400 SEMI-ANNUAL REPORT FEBRUARY 28, 2002 CHARTWELL SMALL CAP VALUE FUND Dear Shareholder: The period ended February 28, 2002 provided modest gains for equity investors. A struggling economy showed signs of revival, interest rates fell, and the market recovered after the events of last autumn. Small cap value stocks yet again led the equity strategies, outpacing returns for large stocks and growth stocks. A high concentration of economically sensitive and financial stocks along with low exposure to technology issues contributed to this small value outperformance. Your portfolio generated a return of 5.3% over the six month period ended February 28, 2002, modestly behind the Russell 2000 Value benchmark return of 5.9% during that time. The Fund's annualized return since inception at October 1, 1999 was 21.63% as of February 28, 2002. Your portfolio return can be attributed to the consumer cyclical, business services and energy sectors. In consumer cyclicals, auto parts manufacturers such as ArvinMeritor and Borg Warner and Furniture Brands, a furniture company, were standout picks. G&K Services, a uniform rental company, paced the business service segment. Energy prices spiked up in the period and services providers such as CalDive and Atwood Oceanics were strong performers. Our investment disciplines have not varied. We focus on inexpensive stocks, research the business fundamentals of our companies for improving prospects and own stocks that display catalysts for price appreciation. The strong performance of small cap value stocks over the last two years has expanded their valuation and thus their risk. However, we still feel that smaller value stocks offer a promising future among investment options. /s/David C. Dalrymple David C. Dalrymple, CFA Managing Partner and Portfolio Manager Past performance does not predict future performance. Please see the Schedule of Investments for fund holdings. Fund holdings are subject to change at any time and are not recommendations to buy or sell any security. The Fund invests in smaller companies, which may involve additional risks such as limited liquidity and greater volatility. The Russell 2000 Value Index Measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. CHARTWELL LARGE CAP VALUE FUND Dear Shareholder: Strong returns over the last six month fiscal period have pushed results into positive territory for many investors. Yet, as has become commonplace, a wide range of outcomes was possible: INDEX 6 MONTH RESULTS ----- --------------- Chartwell LCV Fund 0.80% Russell 1000 Value -0.79% S&P 500 -1.67% Russell 1000 Growth -2.41% Barra Value -5.81% Chartwell's Large Cap Value Fund performed well over the last 6 months. Against the background of an improving economic outlook, stocks continued their rally off the September lows. We believe the outlook for the economy and the equity markets remains on solid ground, although stock gains are likely to moderate after two solid quarters of positive performance. Perhaps the biggest issue the stock and bond markets are facing is a prospective change in Fed policy. Investors always worry about the impact of monetary tightening, and history buffs remember the poor markets resulting from prior Fed actions. We believe this cycle is different and that the Fed will not stand in the way of an economic rebound given the benign inflation outlook. While some interest rates will certainly rise from these low levels, it is not an event to worry about since the increases will likely be moderate and fully discounted by investors. In fact, rising interest rates will signal that the economic rebound is likely to be sustainable. This would send stocks higher. During the 6 month fiscal period, the strongest results were obtained in the Staples, Materials and Healthcare industries. Weak sectors included Telecom and Technology. Some notable leaders and laggards are detailed below: POSITIVE 6 MONTH STOCKS NEGATIVE 6 MONTH STOCKS ----------------------- ----------------------- Starwood Hotels +26% Worldcom -52% General Dynamics +18% Sprint Corp. -24% Avon Products +17% Electronic Data Systems -15% Philip Morris +15% IBM -14% Wells Fargo +14% AT&T -13% We have been selling Starwood, Avon, Philip Morris and General Dynamics recently into the strong advance. These valuations are no longer attractive and the risk/reward dynamics of the stocks have changed. Worldcom and Sprint have been eliminated. Conversely, we have recently added to the ATT and EDS positions. The stock declines have taken them into undervalued territory. We will continue to invest believing that the economic rebound will remain in place and that stocks will end the year with positive returns. As always, we want to thank our fund holders for their support and confidence in Chartwell. /s/Kevin A. Melich Kevin A. Melich Managing Partner & Portfolio Manager Investing in mutual funds involves risk. Past performance does not predict future performance. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The S & P 500 Composite Stock Price Index is an unmanaged capitalization- weighted index of 500 stocks designed to represent the broad domestic economy. The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and forecasted growth values. The Barra Value Index is designed to differentiate between fast growing companies and growing or undervalued companies. Please see the Schedule of Investments for fund holdings. Fund holdings are subject to change at any time and are not recommendations to buy or sell any security. 05/2002 CHARTWELL SMALL CAP VALUE FUND SCHEDULE OF INVESTMENTS AS OF FEBRUARY 28, 2002 (UNAUDITED) Shares COMMON STOCKS: 98.1% Market Value ------ -------------------- ------------ BASIC INDUSTRY: 16.4% 3,040 AptarGroup, Inc. $ 105,184 3,740 Arch Chemicals, Inc. 87,105 3,390 CLARCOR, Inc. 95,327 4,810 Cytec Industries Inc.* 130,591 6,700 Elcor Corporation 156,177 5,300 H.B. Fuller Company 141,404 4,410 Kaydon Corporation 110,162 3,300 Minerals Technologies, Inc. 168,102 7,900 NOVA Chemicals Corporation 169,060 10,300 Packaging Corp of America* 197,554 4,410 USFreightways Corporation 158,760 ---------- 1,519,426 ---------- BUSINESS SERVICES: 5.7% 3,000 ABM Industries, Inc. 98,100 4,600 G & K Services, Inc. 162,610 4,800 Insight Enterprises, Inc.* 102,432 7,740 MSC Industrial Direct Co., Inc.* 163,237 ---------- 526,379 ---------- CAPITAL SPENDING: 3.7% 6,320 Gardner Denver, Inc.* 125,199 5,000 Littlefuse, Inc.* 118,450 4,550 Regal-Beloit Corporation 101,465 ---------- 345,114 ---------- CONSUMER CYCLICAL: 8.2% 5,300 ArvinMeritor, Inc. 149,407 2,890 BorgWarner, Inc. 173,833 4,230 Dal-Tile International Inc.* 104,904 3,300 Furniture Brands International, Inc.* 125,895 4,400 Harman International Industries, Inc. 205,920 ---------- 759,959 ---------- CONSUMER SERVICES: 11.5% 3,850 bebe stores, inc.* 87,395 3,100 Factory 2-U Stores, Inc.* 53,258 2,600 Linens 'n Things, Inc.* 74,386 10,320 Pier 1 Imports, Inc. 206,090 4,000 Rare Hospitality International, Inc.* 107,560 11,900 Spanish Broadcasting System, Inc.* 148,036 4,000 Speedway Motorsports, Inc.* 96,200 3,521 The Men's Wearhouse, Inc.* 86,476 11,100 Unifi, Inc.* 80,808 6,200 Vans, Inc.* 85,560 2,500 Wolverine World Wide, Inc. 38,700 ---------- 1,064,469 ---------- CONSUMER STAPLES: 2.2% 3,360 Corn Products International, Inc. 103,320 7,000 Rayovac Corporation* 95,200 ---------- 198,520 ---------- ENERGY: 4.4% 1,900 Atwood Oceanics, Inc.* 75,905 7,000 Cal Dive International, Inc.* 160,454 3,370 Lone Star Technologies, Inc.* 54,830 3,760 Precision Drilling Corporation* 110,544 ---------- 401,733 ---------- FINANCIAL SERVICES: 17.3% 4,000 AmerUs Group Co. 136,720 3,960 Community First Bankshares, Inc. 100,030 4,110 Cullen/Frost Bankers, Inc. 141,589 5,430 Financial Federal Corporation* 160,456 4,100 Fulton Financial Corporation 95,530 5,804 Hudson United Bancorp 178,183 3,200 IPC Holdings, Ltd. 99,552 2,700 Philadelphia Consolidated Holding Corp.* 111,024 1,800 StanCorp Financial Group, Inc. 96,930 5,600 Sterling Bancshares, Inc. 74,424 2,900 Webster Financial Corporation 101,674 4,100 Westamerica Bancorporation 168,633 2,110 Wilmington Trust Corporation 138,395 ---------- 1,603,140 ---------- HEALTHCARE: 3.4% 2,900 Cambrex Corporation 120,031 4,240 Renal Care Group, Inc.* 130,168 5,700 Sola International, Inc.* 64,182 ---------- 314,381 ---------- REITS: 10.4% 3,320 Alexandria Real Estate Equities, Inc. 137,282 4,035 Arden Realty, Inc. 103,699 2,800 BRE Properties, Inc. 84,000 4,920 Home Properties of New York, Inc. 159,064 5,400 Mission West Properties, Inc. 65,340 4,350 PS Business Parks, Inc. 145,420 5,500 Reckson Associates Realty Corporation 128,095 4,250 SL Green Realty Corp. 135,660 ---------- 958,560 ---------- TECHNOLOGY: 8.0% 7,300 Asyst Technologies, Inc.* 122,494 3,000 DuPont Photomasks, Inc.* 128,940 3,300 Electronics for Imaging, Inc.* 64,020 6,200 Entegris, Inc.* 63,984 6,800 Integrated Silicon Solution, Inc.* 70,788 7,300 Maxtor Corporation* 52,195 4,600 Park Electrochemical Corp. 116,150 4,800 Radiant Systems, Inc.* 42,240 8,500 SIPEX Corporation* 81,090 ---------- 741,901 ---------- UTILITIES: 6.9% 5,440 ALLETE, Inc. 155,530 3,100 Commonwealth Telephone Enterprises, Inc.* 116,808 9,400 El Paso Electric Company* 134,984 5,800 Sierra Pacific Resources 93,670 5,400 Vectren Corporation 135,000 ---------- 635,992 ---------- Total Common Stocks (Cost $8,147,103) $9,069,574 ---------- SHORT-TERM INVESTMENTS: 2.0% ---------------------------- 186,965 Cash Trust Series II- Treasury Cash Series Fund II (Cost $186,965) 186,965 ---------- Total Investments in Securities (Cost $8,334,068): 100.1% 9,256,539 Liabilities in excess of Other Asset: (0.1%) (10,027) ---------- Net Assets: 100.0% $9,246,512 ---------- ---------- * Non-income producing security. See Notes to Financial Statements. CHARTWELL LARGE CAP VALUE FUND SCHEDULE OF INVESTMENTS AS OF FEBRUARY 28, 2002 (UNAUDITED) Shares COMMON STOCKS: 96.8% Market Value ------ -------------------- ------------ BASIC INDUSTRY: 3.6% 13,465 Alcoa, Inc. $ 505,880 10,175 MeadWestvaco Corporation 353,479 ----------- 859,359 ----------- CAPITAL GOODS: 10.1% 4,680 Caterpillar, Inc. 259,787 4,070 Emerson Electric Co. 234,391 5,602 General Dynamics Corporation 509,110 20,374 General Electric Company 784,399 11,355 Honeywell International, Inc. 432,853 1,725 Northrop Grumman Corporation 184,644 ----------- 2,405,184 ----------- CONSUMER CYCLICAL: 1.5% 9,919 Starwood Hotels & Resorts Worldwide, Inc. 357,084 ----------- CONSUMER GOODS: 1.3% 8,550 The May Department Stores Company 313,272 ----------- CONSUMER STAPLES: 12.7% 7,750 Anheuser-Busch Companies, Inc. 394,088 11,948 Avon Products, Inc. 617,592 5,436 The McGraw-Hill Companies, Inc. 357,689 17,713 Philip Morris Companies, Inc. 932,767 4,325 The Procter & Gamble Company 366,717 7,715 Viacom, Inc.* 359,133 ----------- 3,027,986 ----------- ENERGY: 7.3% 8,450 Baker Hughes, Incorporated 298,369 7,465 ChevronTexaco Corporation 630,345 7,908 Kerr- McGee Corporation 437,233 6,605 Phillips Petroleum Company 390,422 ----------- 1,756,369 ----------- FINANCIAL: 18.9% 11,315 Bank of America Corporation 723,594 27,193 Citigroup, Inc. 1,230,483 7,845 Comerica, Incorporated 469,523 13,531 FleetBoston Financial Corporation 451,665 8,356 Morgan Stanley Dean Witter & Co. 410,447 10,120 PNC Financial Services Group 555,993 14,329 Wells Fargo & Company 672,030 ----------- 4,513,735 ----------- HEALTHCARE: 9.2% 9,004 American Home Products Corp. 572,204 7,330 C.R. Bard, Inc. 398,752 15,115 Pharmacia Corporation 620,471 9,920 Merck & Co., Inc. 608,394 ----------- 2,199,821 ----------- INSURANCE/OTHER: 13.3% 12,472 ACE Limited 547,521 12,930 Freddie Mac 824,158 15,225 Household International, Inc. 784,087 2,883 Marsh & McLennan Companies, Inc. 304,301 4,815 Principal Financial Group, Inc.* 117,293 9,067 The Hartford Financial Services Group, Inc. 607,489 ----------- 3,184,849 ----------- TECHNOLOGY: 9.4% 13,816 Cadence Design Systems, Inc.* 292,208 6,287 Electronic Data Systems Corporation 371,122 24,565 Flextronics International Ltd.* 352,262 5,830 International Business Machines Corporation 572,040 26,783 LSI Logic Corporation* 401,477 8,445 Texas Instruments Incorporated 247,861 ----------- 2,236,970 ----------- TELECOMMUNICATIONS: 6.5% 21,717 AT&T Corp.* 337,482 14,287 SBC Communications, Inc. 540,620 11,282 Sprint Corporation 158,963 11,174 Verizon Communications, Inc. 522,943 ----------- 1,560,008 ----------- UTILITIES: 3.0% 10,552 El Paso Corporation 412,372 13,205 Xcel Energy, Inc. 312,298 ----------- 724,670 ----------- Total Common Stocks (Cost $22,886,371) $23,139,307 ----------- SHORT-TERM INVESTMENTS: 2.6% 630,020 Cash Trust Series II - Treasury Cash Series Fund II (Cost $630,020) 630,020 ----------- Total Investments in Securities (Cost $23,516,391): 99.4% 23,769,327 Other Assets less Liabilities: 0.6% 146,471 ----------- Net Assets: 100.0% $23,915,798 ----------- ----------- * Non-income producing security. See Notes to Financial Statements. CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND STATEMENTS OF ASSETS AND LIABILITIES AT FEBRUARY 28, 2002 (UNAUDITED) SMALL CAP LARGE CAP VALUE FUND VALUE FUND ---------- ---------- ASSETS Investments in securities, at value (identified cost $8,334,068 and $23,516,391, respectively) $9,256,539 $23,769,327 Receivables: Dividends and interest 7,782 53,505 Investment securities sold 22,327 631,618 Prepaid expenses 1,036 2,008 ---------- ----------- Total assets 9,287,684 24,456,458 ---------- ----------- LIABILITIES Payables: Due to Advisor 92 1,929 Due to Custodian 2,301 16,750 Securities purchased 22,003 501,343 Accrued expenses 16,776 20,638 ---------- ----------- Total liabilities 41,172 540,660 ---------- ----------- NET ASSETS $9,246,512 $23,915,798 ---------- ----------- ---------- ----------- Net asset value, offering and redemption price per share [$9,246,512/633,734 and $23,915,798/2,307,769 shares; outstanding unlimited number of shares (par value $0.01) authorized] $14.59 $10.36 ------ ------ ------ ------ COMPONENTS OF NET ASSETS Paid-in capital $8,286,100 $25,087,033 Undistributed net investment income 18,511 158,894 Accumulated net realized gain/(loss) on investments 19,430 (1,583,065) Net unrealized appreciation on investments 922,471 252,936 ---------- ----------- Net assets $9,246,512 $23,915,798 ---------- ----------- ---------- ----------- See Notes to Financial Statements. STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 2002 (UNAUDITED) SMALL CAP LARGE CAP VALUE FUND VALUE FUND ---------- ---------- INVESTMENT INCOME Income Dividends (Net of foreign tax on dividends of $134 and $0, respectively) $ 56,164 $ 240,259 Interest 1,684 5,645 -------- ----------- Total income 57,848 245,904 -------- ----------- Expenses Advisory fees (Note 3) 28,543 57,983 Administration fees (Note 3) 14,876 23,193 Professional fees 11,742 13,064 Fund Accounting fees 11,447 12,876 Transfer Agent fees 4,367 5,031 Custody fees 3,567 9,917 Trustees' fees 2,413 3,587 Insurance fees 634 1,797 Reports to shareholders 532 992 Registration fees 305 3,279 Other 200 2,240 -------- ----------- Total expenses 78,626 133,959 Less: advisory fee waiver and absorption (Note 3) (39,297) (47,072) -------- ----------- Net expenses 39,329 86,887 -------- ----------- Net investment income 18,519 159,017 -------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain/(loss) from security transactions 22,189 (1,440,312) Net change in unrealized appreciation on investments 426,387 1,104,816 -------- ----------- Net realized and unrealized gain/(loss) on investments 448,576 (335,496) -------- ----------- Net Increase/(decrease) in Net Assets Resulting From Operations $467,095 $ (176,479) -------- ----------- -------- ----------- See Notes to Financial Statements. CHARTWELL SMALL CAP VALUE FUND STATEMENT OF CHANGES IN NET ASSETS Six Months Year Ended Ended Feb. 28, 2002 Aug. 31, 2001 ------------- ------------- (Unaudited) INCREASE IN NET ASSETS FROM OPERATIONS Net investment income $ 18,519 $ 24,749 Net realized gain from security transactions 22,189 334,147 Net change in unrealized appreciation on investments 426,387 333,464 ---------- ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 467,095 692,360 ---------- ---------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income (19,603) (7,779) Net realized gain on securities transactions (296,647) (95,767) ---------- ---------- TOTAL DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (316,250) (103,546) ---------- ---------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST Net increase in net assets derived from net change in outstanding shares (a) 2,788,315 4,333,393 ---------- ---------- TOTAL INCREASE IN NET ASSETS 2,939,160 4,922,207 NET ASSETS Beginning of period 6,307,352 1,385,145 ---------- ---------- END OF PERIOD $9,246,512 $6,307,352 ---------- ---------- ---------- ---------- (a) A summary of share transactions is as follows: Six Months Ended Year Ended Feb. 28, 2002 Aug. 31, 2001 ----------------------- ----------------------- Shares Paid in Capital Shares Paid in Capital ------ --------------- ------ --------------- Shares sold 181,846 $2,550,200 320,335 $4,255,170 Shares issued in reinvestment of distributions 17,118 238,115 5,826 78,235 Shares redeemed 0 0 (1) (12) ------- ---------- ------- ---------- Net increase 198,964 $2,788,315 326,160 $4,333,393 ------- ---------- ------- ---------- ------- ---------- ------- ---------- See Notes to Financial Statements. CHARTWELL LARGE CAP VALUE FUND STATEMENT OF CHANGES IN NET ASSETS Six Months Year Ended Ended February 28, 2002 Aug. 31, 2001 ----------------- ------------- (Unaudited) INCREASE / (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment income $ 159,017 $ 229,606 Net realized loss from security transactions (1,440,312) (74,012) Net change in unrealized appreciation/ (depreciation) on investments 1,104,816 (1,124,787) ----------- ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (176,479) (969,193) ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income (229,500) (64,746) Net realized gain of securities transactions -- (50,138) ----------- ----------- TOTAL DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (229,500) (114,884) ----------- ----------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST Net increase/(decrease) in net assets derived from net change in outstanding shares (a) (3,154,729) 19,664,932 ----------- ----------- TOTAL INCREASE/(DECREASE) IN NET ASSETs (3,560,708) 18,580,855 NET ASSETS Beginning of period 27,476,506 8,895,651 ----------- ----------- END OF PERIOD $23,915,798 $27,476,506 ----------- ----------- ----------- ----------- (a) A summary of share transactions is as follows: Year Six Months Ended Ended February 28, 2002 Aug. 31, 2001 ----------------------- ----------------------- Shares Paid in Capital Shares Paid in Capital ------ --------------- ------ --------------- Shares sold 167,236 $ 1,684,605 1,828,348 $19,847,429 Shares issued in reinvestment of distributions 19,869 205,050 10,221 114,884 Shares redeemed (527,068) (5,044,384) (27,489) (297,381) -------- ----------- --------- ----------- Net increase (339,963) $(3,154,729) 1,811,080 $19,664,932 -------- ----------- --------- ----------- -------- ----------- --------- ----------- See Notes to Financial Statements. CHARTWELL SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD Six Months Year Oct. 1, 1999* Ended Ended through Feb. 28, 2002 Aug. 31, 2001 Aug. 31, 2000 ------------- ------------- ----------------- (Unaudited) Net asset value, beginning of period $14.51 $12.75 $10.00 ------ ------ ------ Income from investment operations: Net investment income 0.02 0.07 0.05 Net realized and unrealized gain on investments 0.71 2.33 2.73 ------ ------ ------ Total from investment operations 0.73 2.40 2.78 ------ ------ ------ Less distributions: From net investment income (0.04) (0.05) (0.03) From net capital gains (0.61) (0.59) -- ------ ------ ------ Total distributions (0.65) (0.64) (0.03) ------ ------ ------ Net asset value, end of period $14.59 $14.51 $12.75 ------ ------ ------ ------ ------ ------ Total return 5.29%+ 19.20% 27.82%+ Ratios/supplemental data: Net assets, end of period (thousands) $9,247 $6,307 $1,385 Ratio of expenses to average net assets: Before expense reimbursement 2.20%** 3.31% 15.23%** After expense reimbursement 1.10%** 1.10% 1.10%** Ratio of net investment income to average net assets: After expense reimbursement 0.52%** 0.62% 0.48%** Portfolio turnover rate 19.86% 68.13% 68.77%
* Commencement of operations. ** Annualized. + Not Annualized. See Notes to Financial Statements. CHARTWELL LARGE CAP VALUE FUND FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD Six Months Year Oct. 1, 1999* Ended Ended through Feb. 28, 2002 Aug. 31, 2001 Aug. 31, 2000 ------------- ------------- ----------------- (Unaudited) Net asset value, beginning of period $10.38 $10.63 $10.00 ------ ------ ------ Income from investment operations: Net investment income 0.08 0.04 0.11 Net realized and unrealized gain/(loss) on investments -- (0.23) 0.55 ------ ------ ------ Total from investment operations 0.08 (0.19) 0.66 ------ ------ ------ Less distributions: From net investment income (0.10) (0.03) (0.03) From net capital gains -- (0.03) -- ------ ------ ------ Total distributions (0.10) (0.06) (0.03) ------ ------ ------ Net asset value, end of period $10.36 $10.38 $10.63 ------ ------ ------ ------ ------ ------ TOTAL RETURN 0.80%+ (1.85%) 6.61%+ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $23,916 $27,477 $8,896 Ratio of expenses to average net assets: Before expense reimbursement 1.16%** 1.18% 2.89%** After expense reimbursement 0.75%** 0.75% 0.75%** Ratio of net investment loss to average net assets: After expense reimbursement 1.37%** 1.18% 1.38%** Portfolio turnover rate 83.50% 173.68% 169.14%
* Commencement of operations. ** Annualized. + Not Annualized. See Notes to Financial Statements. CHARTWELL LARGE CAP VALUE FUND CHARTWELL SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS AT FEBRUARY 28, 2002 (UNAUDITED) NOTE 1 - ORGANIZATION The Chartwell Large Cap Value Fund and Chartwell Small Cap Value Fund (the "Funds") are each a series of shares of beneficial interest of Advisors Series Trust (the "Trust"), which is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. Each Fund's investment objective is growth of capital, with a secondary objective to provide current income. The Funds began operations on October 1, 1999. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America. A. Security Valuation: The Funds' investments are carried at fair value. Securities that are primarily traded on a national securities exchange shall be valued at the last sale price on the exchange on which they are primarily traded on the day of valuation or, if there has been no sale on such day, at the mean between the bid and asked prices. Securities primarily traded in the NASDAQ National Market System for which market quotations are readily available shall be valued at the last sale price on the day of valuation, or if there has been no sale on such day, at the mean between the bid and asked prices. Over-the-counter ("OTC") securities which are not traded in the NASDAQ National Market System shall be valued at the most recent trade price. Securities for which market quotations are not readily available, if any, are valued following procedures approved by the Board of Trustees. Short-term investments are valued at amortized cost, which approximates market value. B. Federal Income Taxes: It is the Funds' policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. C. Security Transactions, Dividends and Distributions: Security transactions are accounted for on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. Dividend income and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions to shareholders from net investment income and net realized capital gains is determined in accordance with Federal income tax regulations which differs from accounting principles generally accepted in the United States of America. D. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets during the reporting period. Actual results could differ from those estimates. NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES For the six months ended February 28, 2002, Chartwell Investment Partners (the "Advisor") provided the Funds with investment management services under an Investment Advisory Agreement. The Advisor furnished all investment advice, office space, facilities, and provides most of the personnel needed by each Fund. As compensation for its services, the Advisor is entitled to a monthly fee at the annual rate of 0.50% based upon the average daily net assets of the Chartwell Large Cap Value Fund and 0.80% based upon the average daily net assets of the Chartwell Small Cap Value Fund. For six months ended February 28, 2002, the Chartwell Large Cap Value Fund and the Chartwell Small Cap Value Fund incurred $57,983 and $28,543, respectively, in Advisory Fees. The Funds are responsible for their own operating expenses. The Advisor has agreed to reduce fees payable to it by each Fund and to pay each Fund's operating expenses to the extent necessary to limit each Fund's aggregate annual operating expenses to 0.75% of average net assets (the "expense cap") for the Chartwell Large Cap Value Fund and 1.10% of average net assets (the "expense cap") for the Chartwell Small Cap Value Fund. Any such reductions made by the Advisor in its fees or payment of expenses which are a Fund's obligation are subject to reimbursement by the Fund to the Advisor, if so requested by the Advisor, in subsequent fiscal years if the aggregate amount actually paid by the Fund toward the operating expenses for such fiscal year (taking into account the reimbursement) does not exceed the applicable limitation on the Fund's expenses. The Advisor is permitted to be reimbursed only for fee reductions and expense payments made in the previous three fiscal years, but is permitted to look back five years and four years, respectively, during the initial six years and seventh year of the Fund's operations. Any such reimbursement is also contingent upon Board of Trustees review and approval at the time the reimbursement is made. Such reimbursement may not be paid prior to a Fund's payment of current ordinary operating expenses. For the six months ended February 28, 2002, the Advisor reduced its fees and absorbed Fund expenses in the amount of $47,072 for the Chartwell Large Cap Value Fund and $39,297 for the Chartwell Small Cap Value Fund; no amounts were reimbursed to the Advisor. Cumulative expenses subject to recapture pursuant to the aforementioned conditions amounted to $234,899 for the Chartwell Large Cap Value Fund and $240,470 for the Chartwell Small Cap Value Fund at February 28, 2002. U.S. Bancorp Fund Services, LLC (the "Administrator") acts as the Funds' Administrator under an Administration Agreement. The Administrator prepares various federal and state regulatory filings, reports and returns for the Funds; prepares reports and materials to be supplied to the trustees; monitors the activities of the Funds' custodian, transfer agent and accountants; coordinates the preparation and payment of the Funds' expenses and reviews the Funds' expense accruals. For its services, the Administrator receives a monthly fee at the following annual rate: Fund asset level Fee rate ---------------- -------- Less than $15 million $30,000 $15 million to less than $50 million 0.20% of average daily net assets $50 million to less than $100 million 0.15% of average daily net assets $100 million to less than $150 million 0.10% of average daily net assets More than $150 million 0.05% of average daily net assets Quasar Distributors, LLC (the "Distributor") acts as the Funds' principal underwriter in a continuous public offering of the Funds' shares. The Distributor is an affiliate of the Administrator. Certain officers of the Funds are also officers of the Administrator and the Distributor. NOTE 4 - PURCHASES AND SALES OF SECURITIES For the six months ended February 28, 2002, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, for the Chartwell Large Cap Value Fund were $19,302,186 and $22,784,047, respectively. For the six months ended February 28, 2002, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, for the Chartwell Small Cap Value Fund were $3,878,889 and $1,403,985, respectively. NOTE 5 - INCOME TAXES As of February, 28, 2002, gross unrealized appreciation and depreciation of investments for federal income tax purposes were as follows: CHARTWELL LARGE CAP VALUE FUND Gross unrealized appreciation $ 1,315,320 Gross unrealized depreciation (1,102,848) ----------- Net unrealized appreciation $ 212,472 ----------- ----------- CHARTWELL SMALL CAP VALUE FUND Gross unrealized appreciation $ 1,240,303 Gross unrealized depreciation (320,567) ----------- Net unrealized appreciation $ 919,736 ----------- ----------- As of February 28, 2002, the cost of investments for federal income tax purposes for the Chartwell Large Cap Value Fund and the Chartwell Small Cap Value Fund were $23,556,855 and $8,336,803, respectively. As of February 28, 2002, the Chartwell Large Cap Value Fund had tax basis capital losses of $102,289, which may be carried over to offset future capital gains expiring in 2009. ADVISOR Chartwell Investment Partners 1235 Westlakes Drive Suite 330 Berwyn, PA 19312 (610) 296-1400 DISTRIBUTOR Quasar Distributors, LLC 615 East Michigan Street Milwaukee, WI 53202 TRANSFER AGENT U.S. Bancorp Fund Services, LLC 615 East Michigan Street Milwaukee, WI 53202 CUSTODIAN U.S. Bank, N.A. 425 Walnut Street Cincinnati, OH 45202 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, NY 10036 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker, LLP 55 Second Street, 24th Floor San Francisco, CA 94105 This report is intended for shareholders of the Fund and may not be used as sales literature unless preceded or accompanied by a current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Share price and returns will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are dated and are subject to change.